Fitzsimmons v. American Home Mortgage Servicing, INC.,Successor

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NEW YORK
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In re: 	Chapter 13
CAROL FITZSIMMONS, 	Case No. 07-70194-ast
Debtor.
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CAROL FITZSIMMONS,
Adv. Proc. No.: 09-8094-ast
Plaintiff,
-against-
AMERICAN HOME MORTGAGE SERVICING, INC.,
as successor in interest to OPTION ONE MORTGAGE
CORPORATION as servicer for LASALLE BANK
NATIONAL ASSOCIATION as trustee for
STRUCTURED ASSET INVESTMENT LOAN TRUST
MORTGAGE PASS THROUGH CERTIFICATES,
SERIES 2003-BC7,
Defendant.
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APPEARANCES:
Carol Fitzsimmons, Debtor pro se
36 Julia Circle
Brookhaven, New York 11733
Peter S. Partee, Esq.
Richard P. Norton, Esq.
Hunton & Williams, LLP
200 Park Avenue, 52nd Floor
New York, New York 10166
HON. ALAN S. TRUST, United States Bankruptcy Judge:
MEMORANDUM OPINION GRANTING DEFENDANT SUMMARY JUDGMENT
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Issues Before the Court and Summary of Decision
Pending before the Court is the Defendant’s unopposed Motion For Summary
Judgment. [dkt item 9] The Plaintiff in this adversary proceeding is the Chapter 13
debtor, Carol Fitzsimmons (“Debtor”). The Defendant is American Home Mortgage
Servicing, Inc. (“AHMSI” or “Defendant”). AHMSI holds the mortgage on real property
owned by Debtor, located at 36 Julia Circle, Brookhaven, New York 11733 (the
“Property”). All of the Debtor’s claims in this adversary proceeding arise out of a
prepetition note and mortgage executed by Debtor, which note and mortgage have
been assigned from time to time.
In her Complaint, Debtor seeks the following relief: (i) on her First Cause of
Action, for a declaratory judgment finding that the proof of claim filed by the AHMSI
should be expunged in its entirety and further denying AHMSI relief from the automatic
stay; (ii) on her Second Cause of Action, for a money judgment against AHMSI in an
amount to be determined at trial; (iii) on her Third Cause of Action, for a money
judgment against AMHSI in an amount to be determined at trial; and (iv) on her Fourth
Cause of Action, for a money judgment against AHMSI in an amount to be determined
at trial, together with costs and attorneys’ fees. [dkt item 1] Each of these prayers for
relief depends upon the merits of Debtor’s claim against AHMSI. However, as
explained at greater length herein, the Court cannot ascertain Debtor’s claims against
AMHSI, and Debtor has failed to controvert AMHSI’s right to judgment as a matter of
law. Therefore, this Court will grant summary judgment in favor of AMHSI.
Jurisdiction
This Court has jurisdiction over this core proceeding pursuant to 28 U.S.C. §§
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157(b)(2)(A), (G), and (K), and 1334(b), and the Standing Order of Reference in effect
in the Eastern District of New York.
Procedural History
On January 19, 2007, Debtor filed a voluntary petition for relief under Chapter 13
of the United States Bankruptcy Code. [main case, dkt item 1] On June 2, 2008, this
Court confirmed Debtor’s Amended Chapter 13 Plan. [main case dkt item 121]
This adversary proceeding was commenced on March 5, 2009. On July 31,
2009, AHMSI filed a motion for summary judgment (“Motion”). [dkt item 9] AHMSI filed
a Statement of Facts in support of its Motion, in accordance with Rule 7056 of the
Federal Rules of Bankruptcy Procedure and Rule 7056-1 of the Local Bankruptcy Rules
of the Eastern District of New York. FED . R. BANKR . P. 7056; E.D.N.Y. LBR 7056-1.
AHMSI also filed a Memorandum of Law in Support of its Motion, in accordance with
Local Bankruptcy Rule 9013-1. E.D.N.Y. LBR 9013-1. [dkt items 10, 11 and 12] Debtor
has failed to respond to the Motion. 1
Undisputed Facts
In accordance with Local Bankruptcy Rule 7056-1, the following factual
allegations made by AHMSI are deemed to be admitted:2
AHMSI is a residential mortgage servicer incorporated in the state of
Delaware. (Decl. ¶ 5)
AHMSI is the successor in interest to Option One with respect to
1 At the time the Complaint was filed in this adversary proceeding, Debtor was represented by the Law
Offices of Avrum J. Rosen, PLLC (“Counsel”). Pursuant to an Order entered after a hearing which Debtor
attended, Counsel was allowed to withdraw as Debtor’s attorney in the main case on July 16, 2009, and in
the adversary on July 31, 2009. [main case dkt item 149] Thus, at the time of the filing of AHMSI’s Motion,
Debtor was no longer represented by counsel, but has had ample opportunity to respond.
2 Citations are to the Declaration of Mirjeta Isufi [dkt item 12], and are hereinafter referred to as “Decl.¶
__.”
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various mortgage loans, including the mortgage against the Property
at issue in this adversary proceeding. (Decl. ¶ 6)
On or about March 24, 2003, the Debtor executed and
delivered to Option One an Adjustable Rate Note (the “Note”)
in the amount of $371,700.00 for the acquisition of the
Property. (Decl. ¶ 7)
On or about March 24, 2003, as security for the repayment of the
amount stated in the Note, the Debtor executed and delivered to
Option One a mortgage (the “Mortgage”) related to the Property.
(Decl. ¶ 8)
The Mortgage was recorded in the Suffolk County Clerk’s Office.
(Decl. ¶ 8)
On or about March 24, 2003, Option One assigned and transferred
the Mortgage to La Salle Bank National Association, as Trustee
(“LaSalle”) (“Assignment of Mortgage”). (Decl. ¶ 9)
Option One remained as servicer of the Mortgage on behalf of LaSalle
until the spring of 2008. (Decl. ¶ 10)
AHMSI succeeded Option One as the servicer for the mortgage in the
spring of 2008 by virtue of its acquisition of substantially all of the
assets constituting the residential mortgage servicing business of
Option One. (Decl. ¶ 11)
By virtue of the properly recorded Note and Mortgage, Structure Asset
Investment Loan Trust Mortgage Pass Through Certificates, Series
2003-BC7 (the “Trust”) holds a valid first priority mortgage against the
Property. (Decl. ¶ 11)
AHMSI, as servicer, is entitled to act on behalf of the Trust in
connection with the Property. (Decl. ¶ 11)
In December of 2005, the Debtor defaulted on her payments and
failed to comply with the terms of the Note and the Mortgage. (Decl.
¶ 12)
LaSalle commenced a foreclosure action against the Property in
Suffolk County on or about May 10, 2006, prior to the Debtor’s
bankruptcy filing. (Decl. ¶ 13)
On January 12, 2007, prior to the Debtor’s bankruptcy filing, a
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foreclosure sale was conducted and the Property was sold to LaSalle
for the bid price of $444,618.08. (Decl. ¶ 14)
On January 19, 2007 (the “Petition Date”), the Debtor filed the instant
bankruptcy case. (Decl. ¶ 15)
In or about March 2007, the Debtor filed an Order to Show Cause in
the Supreme Court of New York, County of Suffolk, seeking to vacate
the foreclosure, asserting defective service. (Decl. ¶ 16)
The Debtor testified at a hearing held in state court on her request to
vacate the foreclosure sale that the Property was a rental property
and that she never resided at that address. (Decl. ¶ 16)
On June 5, 2008, Justice Denise F. Molina of the Supreme Court of
New York, County of Suffolk, issued an Order vacating and setting
aside the judgment of foreclosure with respect to the Property (the
“Order”). (Decl. ¶ 17)
On February 3, 2009, AHMSI, sought relief from the automatic stay
and an order further allowing AHMSI’s claim. (Decl. ¶ 18)
The 	Debtor 	opposed 	AHMSI’s 	stay 	relief 	motion 	arguing 	that
ownership of the Property needed to be addressed in the context of
an adversary proceeding. (Decl. ¶ 19)
On May 4, 2009, Chicago Title Insurance Company provided AHMSI
with a 10-year deed chain of the Property (the “Title Report”). (Decl.
¶ 22)
Pursuant to the Title Report, the Debtor has been in title to the
Property since March 24, 2003, without interruption. (Decl. ¶ 22)
The Title Report shows that none of AHMSI, Option One or LaSalle
have ever held title to the Property. (Decl. ¶ 23)
AHMSI has not prevented the Plaintiff from retaining possession or
enjoying use of the Property. (Decl. ¶ 23)
The Plaintiff has remained in title and possession of the Property
since March 24, 2003. (Decl. ¶ 23)
Debtor’s mortgage payments are past due and owing for the months
of December 2005 through and including July 2009. (Decl. ¶ 24)
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The total balance due on the Property, which includes missed
payments, late charges, fees and escrow advances is approximately
$569,733.06. (Decl. ¶ 24)
Past due principal and interest payments in connection with the
Property total $143,341.66. (Decl. ¶ 24)
Late charges and other fees due total $2,951.37. (Decl. ¶ 24)
Additionally, there is a negative escrow balance of $60,735.95 owed
in connection with the Property. (Decl. ¶ 24)
[dkt item 12]
Legal Analysis
The Standard for Summary Judgment
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, incorporated by
Bankruptcy Rule 7056(c), summary judgment should be granted to the moving party if
the Court determines that “the pleadings, depositions, answers to interrogatories, and
admissions on file, together with affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (quoting FED . R. CIV . P. 56(c)); Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586-87 (1986).
In reviewing a motion for summary judgment, a court must “construe the
evidence in the light most favorable to the [nonmoving party], drawing all inferences and
resolving all ambiguities in [that party’s] favor.” Mathirampuzha v. Potter, 548 F.3d 70,
72-73 (2d Cir. 2008) (internal citations and quotations omitted).
A movant has the initial burden of establishing the absence of any genuine issue
of material fact. Celotex, 477 U.S. at 322-23. A fact is “material” if it “might affect the
outcome of the suit under the governing law.” Anderson, 477 U.S. at 248. An issue of
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fact is genuine “if the evidence is such that a reasonable jury could return a verdict for
the nonmoving party.” Id. If the movant meets its initial burden, the nonmoving party
“must do more than simply show that there is some metaphysical doubt as to the
material facts.” Matsushita, 475 U.S. at 586. Rather, it must present “significant
probative evidence” that a genuine issue of fact exists. Anderson, 477 U.S. at 249
(quotation omitted). “There is no issue for trial unless there exists sufficient evidence in
the record favoring the party opposing summary judgment to support a jury verdict in
that party’s favor.” Cadle Co. v. Newhouse, No. 01 Civ. 1777(DC), 2002 WL 1888716 *4
(S.D.N.Y. 2002) (citing Anderson, 477 U.S. at 249); see also Anderson, 477 U.S. at 250
(finding that summary judgment is appropriate only when “there can be but one
reasonable conclusion as to the verdict”).
Debtor’s Assertions
As previously noted, the legal theory Debtor asserts as her basis to seek relief in
this adversary proceeding is difficult to ascertain. From a review of the Complaint, it
appears that Debtor seeks to expunge AHMSI’s proof of claim and to recover damages
because AHMSI or LaSalle held a defective foreclosure sale, based on lack of proper
notice in the underlying foreclosure action. Debtor appears to argue she was
improperly divested of title to the Property, and that she “has never been restored to title
or possession of” the Property. [Complaint, dkt item 1 ¶¶ 18 - 22]
However, AHMSI has demonstrated that Debtor was never divested of title to the
Property. The Title Report makes clear the Debtor has never been divested of her title
to the Property. Further, AHMSI has never deprived Debtor of possession of the
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Property. There is no contrary evidence before the Court.
Debtor has not pleaded a claim that the failure to properly serve Debtor with the
foreclosure action is itself actionable in tort or otherwise. Moreover, in Justice Molina’s
Order, it is clear that the judgment of foreclosure and the sale were set aside because
Debtor demonstrated that she had not been properly served.
For this Court’s purposes, Debtor has not pleaded a viable claim, and has
certainly not provided either a factually or legally sufficient basis to preclude entry of
summary judgment in favor of AHMSI. Therefore, summary judgment in favor of AHMSI
should be granted.
Conclusion
Summary judgment will be granted in favor of AHMSI on all of Debtor’s claims.
Counsel for AHMSI is directed to submit a judgment within ten (10) days of the entry
hereof.
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____________________________
Alan S. Trust
United States Bankruptcy Judge
Dated: September 15, 2009
Central Islip, New York
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